How to Stack the Deck in Favor of Making the Right Tough Decisions

 

Leaders are remembered for their best and worst judgment calls, especially when the stakes are high, information is limited and the correct call is far from obvious. In the face of ambiguity, uncertainty and conflicting demands, the quality of a leader’s judgment and decision making determines the entire organization’s fate.

 

That’s why leadership experts Noel M. Tichy and Warren G. Bennis claim judgment is the essence of leadership. In their popular book, Judgment: How Winning Leaders Make Great Calls (Portfolio, 2007), they write: “With good judgment, little else matters.  Without it, nothing else matters.”

 

But there’s no one-size-fits-all way to make a judgment call, the authors emphasize. Every organization has distinct problems, people and solutions.

 

A Framework for Judgment

 

A judgment call should not be viewed as a single-point-in-time event.

 

The process begins when leaders recognize the need for change and for a decision. They consequently frame and name the issue, set clear goals and objectives, align people and continue through successful execution.

 

Three Critical Judgment Domains

 

People: Leaders cannot set sound direction and strategy for their enterprises or deal with crises without smart judgment calls about the people on their teams. This is definitely the most complex domain. Sound judgments about people require leaders to:

1. Anticipate the need for key personnel changes
2. Specify leadership requirements with an eye toward the future – not the rearview mirror
3. Mobilize and align the social network to support the right call
4. Make the process transparent so it can be deemed fair
5. Make it happen
6. Provide continuous support to achieve success

 

Strategy: When the current strategic road fails to lead to success, the leader must find a new path. The quality and viability of a strategic judgment call is a function of:

 

1.      The leader’s ability to look over the horizon and frame the right question

2.      The people – both internal and external to the organization – with whom he/she chooses to interact

 

Crisis: During a crisis, leaders must have clear values and know their ultimate goals. A poorly handled crisis can lead to business failure.

 

The Process of Making Judgment Calls

 

In all three domains, good decision making always involves a process that starts with recognizing the need for the call, with steps that facilitate effective execution.

 

1. The Preparation Phase: This phase includes sensing and identifying the need for a judgment call, framing and naming the judgment call, and mobilizing and aligning the right people. While these steps may seem obvious, many factors can contribute to faulty framing and naming, which can result in a bad judgment call. For example, what is your process to separate symptoms from underlying causes? It’s important to allow “redo moments” and continually adjust to get it right.
2. The Call Phase (Making the Judgment Call): There’s a moment when leaders make the call, based on their views of the time horizon and the sufficiency of people’s input and involvement.
3. The Execution/Action Phase: Once a clear call is made, execution is a critical part of the process. Resources, people, capital, information and technology must be mobilized to make it happen. During this phase, feedback loops allow for adjustments.

 

Your Storyline and Why it Matters

 

Winning leaders are teachers, and they teach by telling stories. They develop a teachable point of view: valuable knowledge and experiences that convey ideas and values to energize others.

 

This teachable point of view is most valuable when it is woven into a storyline for the organization’s future success. As a living story, it helps the leader make the judgment call and makes the story become reality because it enlists and energizes others.

 

Winning story lines address three areas:

 

1. Where are we now?
2. Where are we going? (The inspirational storyline boosts the motivation for change and defines the goal)
3. How are we going to get there?

 

If judgment calls are difficult for you, or if you have difficulty creating the storyline for your organizational vision, it’s probably time to revisit these 3 key, strategic questions.

 

Who is Minding the Back Door for Your Business?

 

Most companies I know spend a large portion of their budgets on driving new business through the front door.  Far fewer spend even a fraction as much in a directed effort to avoid having those precious customers walk out the back door.  The prevailing assumption is that by providing pretty good service and having largely satisfied customers, the back door is covered as well as it can be, and everything else is controlled by external market forces.

 

In fact, retaining and developing profitable customers is the result of having a solid and aligned organizational culture focused on building relationships that generate loyalty.  According to Fred Reichheld, researcher, consultant, and author of The Ultimate Question, a loyal customer always returns, brags about your organization and provides (free!) word of mouth advertising.  They are willing to pay more to work with you and, when there is a mistake, they are more forgiving.  The ability to cultivate loyal customers is a profitable and powerful competitive advantage.

 

Satisfaction vs. Loyalty

 

There are 2 measurements that can help you understand and manage your customer relationships: customer satisfaction and customer loyalty. Many organizations assume that high levels of satisfaction translate into customer loyalty when, in fact, customer satisfaction ratings are more closely linked to your customers’ perception of product and service attributes rather than to the value they gain by doing business with you.

 

Satisfaction is a measurement of, “I expected it and I got it; therefore, I’m satisfied.”  If this were translated into a grading system, satisfaction translates into a grade of “C” on a traditional report card. This is precisely why your “satisfied” customers routinely shop around when it comes time to buy again. The desired score is obviously an “A,” an “A” always equates to loyal customers. An “A” implies that customers got more than they expected and their expectations were exceeded in some way.

 

High perceived value, as defined by your customers, creates loyal customer relationships, and research has demonstrated that customer loyalty is the best predictor of your future strength and growth potential. Perceived value occurs at the intersection of what customers want and what they get from you versus what they could get from your competition.

 

In order to create and sustain loyal customers, it is necessary to consider every contact with each customer as an opportunity for you to provide value—every time. Every service point is critical and every service point has a level of expectation from the customer that must be understood and managed. We call these contact points, Points of Connection (POC).

 

Points of Connection

 

Employee impact starts from the way they treat and relate to each customer at a given POC and their treatment of customers stems from the employees’ attitude. Attitude drives behavior, and behavior determines outcomes.  If the employees’ attitudes are positive, their behavior will be positive and supportive of the customer, which will generate results consistent with the expectations of the customer.

 

To effectively manage POCs they must first be identified. Once identified, you must clearly understand what value your customers’ desire from each POC. If there is a disconnect between what your customers expect and what currently exists then it imperative to ensure that proper employee development and process improvements are put into place to correct it.

 

Case Study

 

My friend, Jennifer Cassels, owner of Park Avenue Title Agency in Green Brook, NJ, exemplifies the cultivation of customer loyalty.  In the mortgage industry, the ability to overcome obstacles and close loans within tight timeframes can literally mean the difference between success and failure.  Jennifer works very closely with her clients – many of whom are real estate attorneys and mortgage lenders – to help them however she can to facilitate timely closings.  I’ve heard stories from her clients regarding her willingness to go “above and beyond” the call of duty to get transactions done – all the while providing accurate title services with a smile.  Additionally, she manages the POCs very well.  For example, you’ll always get a live person on the phone during business hours and she has a widely acclaimed closing cost estimate calculator on her website.  By managing POCs effectively and by going out of her way to solve her clients’ most pressing challenges (i.e. “how am I ever going to get this loan closed by Friday?”), Jennifer has created a loyal and growing client base.

 

Conclusion

 

Making the strategic decision to create a loyal customer base is one of the most important commitments you can make to the success of your business.  As Janelle Barlow and Paul Stewart say in their book, Branded Customer Service: The New Competitive Edge, “The customer service experience must be aligned with organizational promises.”  When your customer’s experience is not reflective of what has been advertised, promised, or expected, their trust in your business is undermined, which results in more traffic out the back door and lost revenue opportunities.

 

To build loyalty, your team must learn how to create strong relationships through frequent points of connection and deliver unique service experiences as expected and promised by your marketing and sales activities.  The immediate impact of delivering an exceptional experience based on what you’ve promised is a winning combination and a powerful weapon against the competition.  It will also help to ensure that the customers you work so hard to bring in the front door never even consider looking for the rear exit.

 

The Power of “Value for Value” Relationships

“You don’t get something for nothing
You don’t get freedom for free
You won’t get wise
With the sleep still in your eyes
No matter what your dreams might be”
–  Neil Peart, Rush

When I was a child, one of my father’s favorite sayings was “If it seems too good to be true, then it probably is.” He said this most typically in reference to a free or heavily discounted offer we received in the mail or read about in a magazine.  The core of his point was that, absent exceptional circumstances (like your Uncle in the shoe business scoring you a free pair of Nikes), it is reasonable to expect to have to exchange something of value in order to receive something else of value.

Although we conveniently seem to forget this once in a while (Gevalia coffee maker anyone?), as buyers it is a point we generally accept as true.  This is the “value for value” exchange.

If we consider sales, we can now clarify the #1 task of a salesperson as building a sense of value for their product or service to the point where the prospect’s perception is that it exceeds their cost.  Note that their cost might not be limited to money, also potentially including things like time, effort, opportunity costs, and other trade-offs associated with the purchase decision.  The bottom line is this: if the prospect’s perception of the product or service’s value exceeds their perception of its cost, in almost all cases the sale will be made.

Salespeople can’t force their prospects to buy, however.  In the absence of authority, the buying / selling process reverts to influence. In fact, sales is the art of influence. That is, getting someone to do what you want them to do (i.e. buy) because they see that they will benefit from making that choice (i.e. receive value).

Influence and sales are really one and the same.

Take a moment and think about who you typically need to influence during your business day. Your list might include your boss, your peers, clients, suppliers, business partners, networking partners, internal departments, prospects, and others.  In those relationships, just like in sales, your ability to get what you want depends upon how good you are at building the perception of value – the value you’re prepared to give in exchange for them doing what you want or need them to do.  Like Neil Peart said, “You don’t get something for nothing.”

It’s helpful to have an open mind as you consider the value you have to give in these situations involving influence.  It’s also helpful to have an understanding of what the other person really wants and needs.  How do you get that?  Ask, and then listen very carefully.

What you’ll probably discover is that different people want and need very different things.  A supplier might want a referral to one of your clients.  Your accounting department might need information about the structure of one of your business partnerships.  A networking partner might appreciate an idea or two about how she can be more effective with her “elevator pitch.”  And your boss might need some feedback about how his latest initiative is being received by the staff.

To better appreciate how this works in the real world, let me share an experience of mine with Steve, who I met through networking.

Steve and I were having a 1-on-1 meeting over lunch as he shared some of his frustrations as a relative newcomer to business networking.  He is a partner in a limousine and car service business and believed that because he didn’t have many referrals to give others, they weren’t willing to give him any in return.  In short, Steve was stuck feeling like he didn’t have much value to give others in exchange for influence over referrals.  Our conversation continued as follows:

Mark: “How many cars to you have in service?”
Steve: “About 40.”
Mark: “Approximately how many passengers ride in your cars during any given week?”
Steve: (after some back-of-the-napkin calculations) “More than 2,000.”
Mark: “How long, on average, is each trip?”
Steve: “At least 20 – 30 minutes, if not more.”
Mark: “And are your passengers pretty successful businesspeople or people who are hovering near the poverty line?”
Steve: (beginning to get my point) “Of course, they’re successful people.”
Mark: “So would it be of value for you to be able to offer your networking partners exposure to your passengers – say by posting a flyer in an acrylic panel on the back of the front seat?”
Steve: “You bet!”

Steve probably has more value to offer than many of the people he networks with combined.  He just didn’t see it.  When he did, it gave him both the confidence and the ammunition to be more aggressive in offering value for value exchanges leading to the relationships and referrals he wants.

What value can you offer to those you want to influence?  Probably, like Steve, much more than you think.  If you take the time to understand those you want to influence along with their specific needs, the alignment with what you have to give will become clear and you’ll have more opportunities for “value for value” exchanges.  You’ll have stronger relationships and more influence as a result.